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A number of large retailers have warned that the National Insurance increase could cause inflation and job losses, in a letter sent to chancellor Rachel Reeves.
Over 70 businesses including Tesco, Sainsbury’s, Next, Amazon, and Boots have written to Reeves, in a letter organised by the British Retail Consortium.
The companies believe that the measures including National Insurance increases, raising the National Living Wage and packaging levies could increase the sector’s costs by £70bn.
The letter stated: “For any retailer, large or small, it will not be possible to absorb such significant cost increases over such a short timescale. The effect will be to increase inflation, slow pay growth, cause shop closures and reduce jobs, especially at the entry level.
“This will impact high streets and customers right across the country. We are already starting to make difficult decisions in our businesses and this will be true across the whole industry and our supply chain.”
It continued: “We appreciate the government’s focus on improving the fiscal situation and investing in public services; we also recognise the role businesses have in supporting this. “But, the sheer scale of new costs and the speed with which they occur create a cumulative burden that will make job losses inevitable, and higher prices a certainty.”
A spokesperson for the Treasury responded: “With our public services crumbling and an inherited £22bn fiscal black hole from the previous government, we had to make difficult choices to fix the foundations of the country and restore desperately needed economic stability to allow businesses to thrive.
“By doing this, more than half of employers will either see a cut or no change in their National Insurance bills, there will be £22.6bn more for the NHS and workers’ payslips will be protected from higher tax.”
It comes as Tesco estimated that it would face an increase of around £1bn on its National Insurance bill.
Last month Tesco upped its full-year guidance after a period of “strong momentum” and rising profits in its half-year results.
The supermarket saw its retail operating profits rise by 10% to £1.56bn, while its statutory operating profits were up by 13% to £1.6bn in the period.
